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Ukraine strikes Putin’s refineries – to the displeasure of the USA. But some experts believe that the price of oil could ultimately even fall.
Since the end of April, Ukraine has launched a new series of drone strikes on the heart of the Russian economy: reports of at least a dozen strikes on Russian refineries since April 27 are circulating. The most spectacular one probably found its destination in Salawat in Russia’s republic of Bashkortostan – 1,500 kilometers behind the front lines. And the wave is likely to continue rolling.
But what makes Ukrainians and supporters of their defensive war happy is causing concern in the West, of all places: after an initial series of attacks, the United States warned Ukraine to show restraint, reported the Financial Times citing insiders. The reason seems clear. If the price of oil rises, the global economy suffers. And presumably also Joe Biden’s election campaign in the USA, a country of drivers. The friendship seems to end when it comes to oil. But experts are far from unanimous as to whether the attacks, which are painful for Vladimir Putin’s Russia, actually pose a threat to price levels.
Ukraine’s drone wave is rolling – Russia continues to dominate the world oil market
Energy expert Jörg Schindler sees above all open questions: It seems clear that individual refineries have been hit. However, one can only speculate about the impact on Russia’s production: “There is an information war going on, what is really true cannot be understood,” said the expert from the “Association for the Study of Peak Oil and Gas” when asked by IPPEN.MEDIA. This applies to information from both sides.
But there are indications of effects on Russia’s fuel supply. Reuters According to this, Russia stopped exporting gasoline on March 1st – at the same time, fuel imports from Belarus increased massively by mid-March. There were none at all in January. And at the end of April, diesel prices in Russia rose by ten percent within a week, according to the portal Politico citing official data from the Russian government reported. Gasoline has become 20 percent more expensive since the beginning of the year.
Biden’s Defense Secretary Lloyd Austin also publicly announced the US’s position in April: There was a risk of a “domino effect” on the international oil markets, he explained. He received support from the International Energy Agency. The international markets are “reliant on Russian exports of diesel, raw gasoline and kerosene,” quoted Bloomberg the IEA. Schindler confirms this: Russia, together with the USA and Saudi Arabia, continues to dominate the world oil market, regardless of Western sanctions. “If one of them weakens or production declines in one of these countries, then it will have global consequences.” But there are also dissenting voices – the devil may be in the details.
USA fears about oil prices: Experts disagree – “Russia must export more oil”
Under the telling title “Why Ukraine should continue to attack Russia’s oil refineries,” the three researchers Michael Liebreich, Lauri Myllyvirta and Sam Winter-Levy recently accused Biden’s government of a serious misunderstanding. Strikes on refineries reduced Russia’s ability to produce crude oil processthey argued in the magazine Foreign Affairs. On the export of crude oil, successful attacks would have no negative impact – on the contrary.
Putin’s economy could produce less gasoline or kerosene if the Russian refineries fail, but it needs income: “Russia will be forced to export more crude oil, not less, which will lower prices instead of increasing them,” write the three researchers. In any case, that applies as long as oil sources and export infrastructure are not the target – and Ukraine has recently focused on refineries. Ex-US General Ben Hodges also advised Kiev in March BBCto continue the beating.
Ukraine attacks Russia’s refineries: “Nobody can say we can’t do that”
In any case, Ukraine does not seem to want to be dissuaded from its course. “The US reaction to this was not positive,” President Volodymyr Zelensky said at the end of March Washington Post about the first wave of attacks on refineries at the beginning of the year. However, he emphasized that the USA had no veto on this issue. “We used our drones. Nobody can tell us that we can’t do that.” After a break in April, the Ukrainian armed forces got going again at the end of the month. A selection of the messages:
| 17th of May | Rosneft refinery in Tuapse (Krasnodar region) | Reuters, authorities confirmed fire |
| May 15th | Oil depot in Proletarsk (Rostov region) | HUR, no official confirmation |
| May 11th and 12th | Lukoil Volgograd Refinery | Reuters, authorities confirmed fire |
| 10th of May | “First Plant” small-scale refinery in the Kaluga region | Moscow Times, authorities confirmed fire |
| 10th of May | Oil depot in Rovenkyj (occupied Luhansk region) | Reuters, Occupiers confirmed strike |
| May 9th | Gazprom refinery in Salawat (Republic of Bashkortostan) | Telegram, authorities confirmed smoke |
| May 9th | Two oil depots in Yurovka (Krasnodar Region) | Kyiv Independent, authorities confirmed strike |
| 1st of May | Rosneft refinery in Ryazan (Ryazan region) | Bloomberg, authorities confirm attack |
| 1st of May | JSC Refinery Log (Voronezh Region) | HUR, no official confirmation |
| April 29th | Oil depot in Sevastopol (Crimea) | AP, Authorities confirmed fire |
| April 27th | Slavyansk-na-Kubani Refinery (Krasnodar Territory) | Tass, company confirmed fire and disturbance |
One motive: fuel shortages would massively affect Russia’s military logistics – and for a long time the almost exclusive source of diesel etc. was the domestic refineries. The complex systems are quickly out of operation for a few weeks once they are damaged. But the calculation goes further. Oil revenues are “the heart of the Russian war economy,” explained the Atlantic Council, another line of argument from Kiev. Expert Felix Jaitner also recently confirmed this theory in an interview with IPPEN.MEDIA.
Carnegie Endowment scholar Eugene Rumer also sees soft factors behind the strikes: “Occasional deep strikes on targets in Russia generate public attention and boost morale,” he explained in a think tank report. And finally, there is likely to be a form of satisfaction: Russia has been deliberately attacking the energy infrastructure in Ukraine for a long time – possibly to make the country “uninhabitable,” as Kiev political scientist Mykola Bielieskow told our editorial team. A counterattack can be a balm for war-torn souls – even if it is just a side effect. (fn)